Salem Textiles Ltd.

Salem Textiles Ltd. (SALEMTEXTILES) - Director Report

Company director report

SALEM TEXTILES LIMITEDANNUAL REPORT 2011-2012DIRECTOR'S REPORTTO THE SHARE HOLDERSYour directors have pleasure in submitting the Forty seventh Annual Report together with the Audited Accounts for the year ended 31st March, 2012.1. FINANCIAL RESULTS 2011 -2012 2010-2011 (Rs. In Lacs) (Rs. In Lacs)NET SALES Nil NilOTHER INCOME 697.37 858.11 697.37 858.11(-) LOSS/PROFIT BEFORE FINANCIALCHARGES AND DEPRECIATION (-)103.65 97.78LESS: FINANCIAL CHARGES 2.18 4.06DEPRECIATION 34.12 42.55(-) LOSS/PROFIT FOR THE YEAR (-) 139.95 51.17LESS/ADD ADJUSTMENT RELATING TO PRIORYEARS- OTHERS (-) 4.06 (-) 82.15BALANCE (-) LOSS/PROFIT (-)144.01 (-) 30.98LOSS BROUGHT FORWARD 10066.48 10035.50ACCUMULATED LOSS (-) 10210.49 10066.482. PERFORMANCE2011 -12 was very bad for the Textile Industry. Due to high fluctuation of Raw Material price, global economic recession, severe power cut problems, all the Spinning Mills have suffered a huge loss. We are already in critical position. Even the Conversion party could not supply raw material continuously and give remunerative rate for the conversion.The turnover for the year under review, only conversion charges and other income was Rs. 697.37 Lacs compared to the turnover of Rs.858.11 lacs for the year 2010-11 The Company's operations resulted in a net loss of Rs.139.95 Lacs in the year 2011 -12 compared to the net profit of Rs.51.17 lacs in the year 2010-11.Due to severe Power cut problem, we could not run the unit in full capacity. Because of the Power cut the production was reduced, consequently the conversion charges receipt also reduced.Due to non availability of adequate working capital finance, the Company could not have own production, and therefore the Company had to continue doing conversion works to the available extent to keep the Mill working.3. DIVIDENDDue to accumulated losses, your directors are unable to recommend any dividend for the year under review.4. FINANCIAL POSITIONThe Company continues to face critical financial position, due to accumulated loss and the non availability of sufficient working capital funds. The Company has been declared Sick Industrial Company by Hon'ble BIFR and rehabilitation process is in progress. The Rehabilitation scheme submitted by the Company to Hon'ble BIFR has not so far been cleared.5. MANAGEMENT DISCUSSION AND ANALYSIS OF THE OPERATIONSThe management discussed and analyzed the operational results for 2011-2012 and critically studied the factors that affected production, sales and profit. The management was satisfied with the efforts taken by the Company in the situation prevailed during the year 2011 -12.6. FUTURE TRENDSNon-availability of raw materials at reasonable prices, remunerative prices for finished goods, stiff competition and uncertain power supply are haunting the Textile Industry. The Company could show improvement during this year if the situation changes favourably and the power supply position improves and also the Company is able to' get sufficient conversion works. However, finalisation of viable rehabilitation scheme by Hon'ble BIFR and availability of sufficient working capital will enable the company to commence own production with good prospects of profitable working results in the years to come.7. DIRECTORSDuring the year under review there was no change in the Board of Directors.At this Annual General Meeting, Sri R. Prabakaran is retiring by rotation and he being eligible, offers himself for re-appointment.8. AUDITORSThe retiring auditors M/s. Elangovan & Natarajan, Chartered Accountants are eligible for reappointment.9. COST AUDITORSa). Name and Address : S. Mahadevan & Co, Cost AccountantsNo.112, Sri Abhirami, First Floor, Dr. Radhakrishnan Road, Tatabad Coimbatore-641012.b). Last Date of Submission of Cost Audit Report: 30th September 2011.c). Actual date of Submission of Cost Audit Report: 26.09.201110. DIRECTORS' RESPONSIBILITY STATEMENTIn compliance of Section 217(2AA) of the Companies Act 1956 as amended by Companies (Amendment) Act 2000, the Directors of your Company confirm thata) In the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures.b) The directors have selected such accounting polices and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Loss of the Company for the year ended on 31.03.2012.c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.d) The annual accounts have been prepared on a going concern basis.11. STOCK EXCHANGESThe Company's equity shares are listed at the Bombay Stock Exchange Ltd, Mumbai and Madras Stock Exchange Ltd, Chennai. The Company has been paid Annual Listing Fee to both these Stock Exchanges for the Financial Year 2011-2012.12. DISCLOSURES(i) During the year, there were no transactions of material nature with the Directors, Management, Subsidiaries or their relatives etc., that had potential conflict with the interests of the Company at large.(ii) There were no instances of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchanges or SEBI or any other Statutory Authority on any matter related to the Capital Markets, during the last three years.13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTOIN AND FOREIGN EXCHANGE EARNING AND OUTGO.Information pursuant to Section 217(1 )(e) of the Companies Act, 1956 is given in Annexure I and form part of this report.14. PARTICULARS OF EMPLOYEESThe Company had no employees during the year who were in receipt of remuneration prescribed u/s 217(2A) of the Companies Act, 1956.15. ACKNOWLEDGMENTYour Directors wish to thank the employees at all ranks for the co-operation and untiring efforts given for running the Company. On behalf of the BoardPlace: Attur R. PRABAKARANDate : 11.08.2012 Managing Director B. VENKATESAN DirectorANNEXURE -1 TO THE DIRECTORS' REPORTSTATEMENT CONTAINING PARTICULARS PURSUANT TO THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF DIRECTORS' REPORT.A. CONSERVATION OF ENERGYThe Company is continuing its thrust on energy conservation by taking suitable measures.REQUISITE DATA IN RESPECT OF ENERGY CONSUMPTION ARE GIVEN BELOW: POWER AND FUEL CONSUMPTIONI. ELECTRICITY 2011-2012 2010-2011a Purchased Units KW in lacs 47.19 54.55Total Amount Rs.in lacs 244.74 268.12Rate/ Unit Rs/KW 5.19 4.91b Own Generation through Diesel KW in Lacs 0.40 0.37Generator Unit/Ltr KW 3.00 3.04Cost per Unit Rs/KW 14.14 12.92II. CONSUMPTION PER KG OF PRODUCTION 2011-2012 2010-2011Total Units KW in lacs 47.59 54.92Production Kgs.in lacs 11.29 13.88Unit/Kg KW 4.22 3.96B. TECHNOLOGY ABSORPTIONIn view of paucity of funds, the company has not carried out any technology upgradation work. Only routine and required maintenance works were carried out.C. FOREIGN EXCHANGE EARNING AND OUTGO - NIL On behalf of the BoardPlace: Attur R. PRABAKARANDate : 11.08.2012 Managing Director B. VENKATESAN Director